New Delhi: In a step to promote foreign investments to the country during the XI Five Year Plan, the Cabinet today approved a proposal by the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry for the formation of a company - "Invest India", under Section 25 of the companies Act, 1956.

The non-profit company will be responsible for promoting Foreign investments into the country in a more focused, comprehensive and structured manner.

"Invest India" will be a joint venture between the Government of India, Federation of Indian Chambers of Commerce and Industry (FICCI) and the State Governments.

It is intended to assist foreign investors in identifying and realizing investment opportunities in India. The company will also assist the Government in its efforts towards projecting India as an attractive investment destination for foreign investors.

The company will act as the first reference point for any investor interested in India and will also facilitate in setting up business within the country, by making available sector wise consultants and coordinating with the state government on feasible measures. It will conduct capacity building exercises at the state government level to create an investor friendly environment. It will also undertake promotional work by expanding investor awareness beyond the metros. The company will assist DIPP and other Ministries & Departments in investment promotion projects / events and any other activity within the ambit of investment promotion.

Even as countries across the world compete fiercely to attract FDI, setting up an Investment Promotion Agency is a key part of their strategy to attract foreign Investors. There are more than 160 Investment Promotion Agencies at the national level & over 250 at the sub national level, world wide.

As far as equity is concerned the authorized capital of the company will be Rs 10 crore and the initial paid up capital Rs.1 crore. The financial implication of the proposal for DIPP is Rs 49 lakh only and will be met from the funds provided under the ongoing XI Plan Scheme for Investment Promotion.

"To begin with FICCI will have 51 % and the government will contribute 49 % of the equity. The Government will shed part of it to give it to the state governments. Twenty eight states will be given half a percent each. The government will still retain 35 %," said Shri Anand Sharma, Union Minister of Commerce and Industry.

"Secretary - DIPP will be the chairman and there will be equal number of directors, both from the industry as well as from the government," the minister added. Its management structure will comprise the Board of Directors with 6 members from DIPP and 6 members from FICCI. Secretary DIPP will be its Non Executive Chairman. The Board of Directors will appoint a Managing Director and FICCI will provide the administrative, personnel & management support for day to day functioning.

"There are various other supporting functions which the government will have, to promote investments into India, which we are doing. There have been ongoing schemes under the plan. There were three schemes previously, which have been merged into two schemes and this would continue," Shri Sharma said.

The FDI into the country in the month of June '09 was 55.56% higher at 3.5 billion USD [16971.3 crore INR] over the 2.2 billion USD [10910.1 crore INR] in June '08.

During the interaction, the Minister added that despite the current economic situation, FDI equity inflows amounting to US $ 10.532 billion (Rs. 512.56 billion) have been received during April-July, 2009, which is as against US $ 12.320 (Rs. 514.40 billion) received in April-July, 2008 (corresponding period for last financial year). “The corresponding amount in April, 2007 to July, 2007 was US $ 5.706 billion, compared to which FDI equity inflows during the current financial year have increased by nearly 85%”, he added.